economic

Question-2. New Zealand-is a small-open-economy-that maintains-a flexible-exchange rate, and its domestic-price-level is sticky-in the short run. Suppose that.New Zealand-Reserve. Bank implements a decrease in the domestic money supply.due to-high-inflation.. Explain what difference (if any) the expected duration of the shock.(i.e., whether.the. decrease in the domestic money supply is perceived as transitory or-permanent) makes for its short-run-effects on the economy's (i) nominal-interest rate, (ii) nominal exchange rate, and (tii) level of real output. Use appropriate.diagram(s) to- explain your answer, Page-1-of-39